Russian firm to roll out oxygenated water production
health-crazy west of Europe, but its presence in the east of the
continent has been relatively limited, until now. Russian company
SoiuzSnab is to be the first local firm to produce oxygen-enriched
water as consumers throughout eastern Europe pick up on the growing
trend towards healthy hydration, writes Angela Drujinina.
The water, called Oxygazer, is the result of SoiuzSnab's collaboration with the Russian beer, wine and soft drink industry research institute, and the company will offer licences to producers in Russia and other CIS countries later this year.
According to Dmitry Antonov, project co-ordinator of Info-Media-Group on the promotion of oxygen-enriched water, SoiuzSnab plans to sell about 40 licences in Russia (where negotiations are currently being held with eight manufacturers), 14 in Ukraine and Kazakhstan, and 10 in Byelorussia, Armenia, Azerbaijan, Georgia, Tajikistan and Uzbekistan. The term of the licence is seven years.
The company said it was limiting the number of licenses available in order to ensure that the burgeoning market's growth is not nipped in the bud as a result of a plethora of brands.
"Some Russian companies have already begun production of oxygenated water without the appropriate licence," said Anatoly Cutiev, Oxygazer's patent holder. "These companies have all been sent a warning to cease illegal production and purchase a production licence or face legal action. We are determined to protect our rights."
Oxygenated water is not widely available in Russia, not least because of the high costs involved - in January 2005 the price of a Russian licence increased from $50,000 to $72,000 (a figure sufficiently high to explain the number of unlicensed producers). In Ukraine, the licence costs around $48,000 while in other CIS countries it is around $36,000.
What market there is for oxygenated water has been largely supplied by imports, but this is likely to stop once local production begins, since imports will be too expensive. Although the cost of the licence is relatively steep, there is no need to invest in additional machinery to produce oxygenated water, which means that it can be produced quite cheaply.
As in western Europe, Russian consumers of oxygenated water are expected to be sportspeople or those looking to pursue a healthier life style, and a major advertising campaign for the Oxygazer brand will target these groups in particular. But it will also play the health card by focusing on children, expectant and recent mothers and senior citizens.
But Russia also benefits from a geographical peculiarity which could also boost sales. The levels of atmospheric oxygen in many parts of northern Russia are 25 per cent lower than elsewhere in the country, and the water is expected to be particularly popular there as a result - a factor which could soon see consumption levels approaching those of the west.
Recent figures from market analysts Zenith International show that global oxygen-enhanced water sales are expected to double by 2008, although they currently remain at around 2 per cent of total bottled water volumes. Key to this predicted growth will be a clearer explanation of the product's benefits.
However, a number of factors could still hold back the development of oxygenated water in Russia, not least the low purchasing power of consumers which continues to keep growth rates relatively low. According to data from GosKomStat, total mineral and bottled water volumes reached 1.8 billion litres in 2002; by 2003, this figure had risen to 2.1 billion litres, according to separate figures from analysts Renaissance - Capital.
